U.S. retail sales over the Internet are expected to reach $230 billion by 2008, a level that will represent approximately 10% of total U.S retail sales. As with any other channel, merchants need to drive these retail sales with advertising. One form of advertising unique to the Internet (specifically, to the World Wide Web) is affiliate marketing. An affiliate web site is a web site that experiences a high number of “hits” or visits by web users (also referred to herein as web traffic) that monetizes this traffic by providing hyperlinks to a merchant web site. The links may be in the form of banner advertisements, links embedded in the affiliate web site in text or graphics, pop-up windows that appear in a user's browser upon viewing the affiliate web site, and the like.
The merchant web site may pay the affiliate web site for displaying advertisements, and may additionally pay the affiliate web site for web traffic directed from the affiliate web site to the merchant web site. The most common forms of affiliate marketing compensation are Pay Per Click (PPC), wherein the merchant pays the affiliate for each user visit to its site; Pay Per Lead (PPL), wherein the merchant pays if the user requests information or views additional web pages at the merchant site; or Pay Per Sale (PPS), where the affiliate is paid a flat fee or commission based on purchases a user makes at the merchant site. Merchant web sites may manage their own affiliate web sites, including recruiting affiliates, providing the code to display advertisements and establish links to the merchant web site, tracking user traffic from each affiliate web site and user activity on the merchant web site, and remitting payments to the affiliate web sites.
Alternatively, both merchant and affiliate web sites may utilize the services of an affiliate network manager. The affiliate network manager may selectively and dynamically direct each affiliate web site to display advertising for, and link to, various merchant web sites. Within an affiliate network, merchant web sites may competitively “bid” for advertising and links on the affiliate web sites by making their offers more attractive to affiliates. This process allows merchant web sites to maximize traffic and/or sales by gaining top affiliates. It also maximizes revenue for popular affiliate web sites and those that consistently deliver paying customers.
FIG. 1 depicts a functional block diagram of a representative prior art affiliate network, indicated generally by the numeral 10 (in FIGS. 1 and 2, user redirection is indicated by solid arrows; reading and writing cookies or passing other information is indicated by dotted-line arrows). The network 10 comprises an Affiliate Network Manager site 22, a plurality of Affiliate Web Sites 18, and a plurality of Merchant Web Sites 28 (only one affiliate and one merchant web site depicted in FIG. 1 for simplicity), all interconnected via the Internet 12. A user at a user terminal 14, such as an Internet-connected personal computer executing web browser software, visits an Affiliate Web Site 18, as indicated by the arrow 16. The user may have directly entered the Uniform Resource Locater (URL) of the affiliate web site 18 into his web browser. Alternatively, the user may have “surfed” to the Affiliate Web Site 18, such as by clicking a link from another web site, a search engine, or the like. At the Affiliate Web Site 18, the user is enticed to visit a Merchant Web Site 28, such as by an advertisement, a discount coupon, a positive review of the site or products for sale at the site, or the like. The user clicks a textual or graphic link, which he expects will direct his web browser to the Merchant Web Site 28.
In fact, the link, or URL—which the user never actually sees—directs his web browser to an Affiliate Network Manager site 22, as indicated by the arrow 20. The URL that accomplishes this may be of the form:                http://www.affiliatemanager.com/affiliatesite.php?id=0596        
As known in the art, a variety of variables and corresponding values may be appended to a URL to the right of a “?” character. These are known as a query string. Query string contents do not affect the routing function of a web browser, but pass information to the web server of the target of the URL. The above URL directs the user's web browser to the Affiliate Network Manager site 22, with an identification of the Affiliate Web Site 18, and possibly other information in a query string.
Upon the user's web browser accessing the Affiliate Network Manager site 22, the site 22 attempts to read a pre-existing file from the User Terminal 14 that identifies the user, known in the art as a “cookie.” If a cookie does not exist, the Affiliate Network Manager site 22 creates one and sends a request to the user's web browser to write the cookie as a file on the user terminal 14 (referred to hereinafter as simply writing a cookie). This is indicated by the dashed-line arrow 24. The cookie allows the affiliate Network Manager Site 22 to identify, and hence track, the user as he visits various Affiliate Web Sites 18 and Merchant Web Sites 28 in the affiliate network. The Affiliate Network Manager site 22 records which Affiliate Web Site 18 originated the merchant traffic and to which Merchant Web Site 28 the user was directed. The Affiliate Network Manager 22 then debits the Merchant Web Site 28 for the referral (in a PPC scheme), and credits the Affiliate Web Site 18.
The Affiliate Network Manager site 22 then directs the user's browser, as indicated by arrow 26, to the Merchant Web Site 28. The user, unaware of the intervention of the Affiliate Network Manager site 22, browses good and services offered for sale at the Merchant Web Site 28. The Merchant Web Site 28 may itself write and read cookies to and from the user's terminal 14, as indicated by the dashed-line arrow 30, to track the user's activity at the Merchant Web Site 28. For example, the Merchant Web Site 28 may use cookies to track items selected for purchase and maintained in a virtual shopping cart. The Merchant Web Site 28 may report page requests and purchases made by the user to the Affiliate Network Manager 22, if the Affiliate Web Site 18 is compensated on a PPL or PPS basis. The Affiliate Network Manager 22 then credits the Affiliate Web Site 18 and debits the Merchant Web Site 28 accordingly.
The advent of affiliate network managers has greatly expanded the affiliate network model of Internet advertising and sales. However, the imposition of an Affiliate Network Manager Site 32 in the referral of web traffic from an Affiliate Web Site 18 to a Merchant Web Site 28 raises at least one significant shortcoming. In addition to affiliate network marketing, web merchants solicit customers from other sources. One particularly important source of web traffic is search engines. As well known in the art, search engines are web sites that maintain databases of other web sites, and present to a user an ordered list of web sites matching or otherwise having relevance to a user's search query. Search engines may return thousands of web sites in response to a given query, and must order these results prior to presenting them to the user. Studies have shown that users typically access only the first few web sites in the list; hence, achieving a high ranking in search result ordering is critical for deriving web traffic from search engines.
A number of techniques may be utilized to order search results by anticipated user relevance. Indeed, the algorithms and techniques utilized to order search results are among the most valuable intellectual property assets of commercial search engine companies. One search result ranking technique that is widely speculated as being employed by popular search engines is known as an inbound link credit. Simply stated, an inbound link credit is a count of the number of web pages cataloged in a search engine database that link to a particular web site. Web sites with a higher inbound link credit will be sorted higher in search results listings, on the theory that a web site to which many other web sites have linked, likely offers content of perceived value, and hence the search engine user is likely to find the site of value as well.
Referring again to FIG. 1, it is evident that a large number of Affiliate Web Sites 18 may direct user traffic to a given Merchant Web Site 28. However, the links that accomplish this are indirect; they link directly to the Affiliate Network Manager site 22. These links are not counted in the inbound link credit of the Merchant Web Site 28. If all Affiliate Web Sites 18 were able to link directly to Merchant Web Sites 28, the Merchant Web Sites 28 may be ranked higher in search engine queries, further increasing user traffic to the Merchant Web Sites 28 and increasing sales opportunities. Another recent problem with many affiliate marketing networks is an unscrupulous practice known as “cookie hijacking.” Affiliates attempting to receive credit for traffic rightfully belonging to another affiliate may use adware or spyware to alter key identifying information in the URL on other Affiliate Web Sites 18 that take a user to a Merchant Web Site 28 (indirectly, through the Affiliate Network Manager site 22). For example, the adware or spyware may substitute the unscrupulous affiliate's identification code in the query string for that of the rightful affiliate. In this manner, the unscrupulous affiliate receives credit for all traffic originating at the “hacked” Affiliate Web Sites 18.